The manufacturing and service sectors of the major economies recorded a contraction in September, due to the global phenomenon of inflation, the increase in interest rates by central banks, and the war in Ukraine.
In the US, the Composite Purchasing Managers’ Index (PMI), prepared by S&P Global, rose 44.6 points in August to 49.3 last month, however, it remained for the third consecutive month at less than 50 points, which means a contraction. .
Regardless of the decline during the first wave of the Covid-19 pandemic in the spring of 2020, business production in the third quarter was the weakest since the 2007-2009 financial crisis.
Despite the GDP contraction in the first and second quarters, the income growth side showed that the economy expanded at a moderate pace.
The economy is slowing as the Federal Reserve tightens monetary policy to calm demand and bring inflation back to target.
Come recession in Europe
In the Eurozone, private sector economic activity has boosted its contraction, in a trend that has heightened fears of a recession driven by persistent inflation.
The composite PMI fell to 48.2 points from 48.9 in August, its lowest level in the last 20 months and its third decline in a row.
The S&P report stated that the industrial sector led the slowdown while industrial production fell for the fourth consecutive month.
Chris Williamson, an economist at S&P Global, said a recession looms for the eurozone as companies warn of worsening business conditions. This picture is exacerbated by the price pressures associated with higher energy prices.
Williamson said the concern has shifted from supply chains to the rising cost of living, a scenario affecting demand, industrial production and even the service sector.
He pointed out that “the available indicators indicate a growing economic decline for the fourth quarter, which increases the chances of the region falling into a recession.”
In Germany, the outlook looks more bleak, as the composite PMI fell to 45.9 points in September from a reading of 46.9 in August.